Gold notches another new record before retreating on profit taking ahead of the holiday weekend
OUTSIDE MARKET DEVELOPMENTS: On Wednesday, Fed Chairman Powell suggested that the Trump administration's unprecedented trade policies could lead to "higher inflation and slower growth." Stagflation understandably presents a challenge for the central bank.
"We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension,” Powell warned.
Powell went on to indicate that the Fed will remain on pause for the time being. “We are well positioned to wait for greater clarity," he said.
President Trump lashed out, posting on social media that Powell "should have lowered Interest Rates... long ago, but he should certainly lower them now." Trump threatened that "termination cannot come fast enough!"
Fed funds futures continue to suggest Trump's wish for lower rates will be granted, but probably not until July. May remains off the table, and prospects for a June cut dimmed after Powell's speech. The implied Fed funds rate for year-end is 3.4775%, indicating market expectations for 90 bps of easing by December.
The ECB delivered a 25 bps rate cut today, noting that "the outlook for growth has deteriorated owing to rising trade tensions." The vote was unanimous, and ECB President Lagarde revealed that a 50 bps cut was discussed.
That suggests a more dovish tilt at the ECB, even though EU plans for considerable spending (led by Germany) on defense and infrastructure provide a significant underpinning for growth. The euro is lower on the day, but remains generally well bid near the top of the recent range.
Without any help from a softer euro, the dollar index remains on the ropes near the three-year low set last week at 99.01. The 61.8% retracement level of the rally from 89.20 (Jan'21) to 114.78 (Sep'22) comes in at 98.97. The 100-month moving average is just below at 98.66. Both levels appear vulnerable, and penetration would have grim implications for the greenback.
Housing Starts tumbled 11.4% in March to 1.324M, below expectations of 1.418M, versus a negative revised 1.494M in February (was 1.501M). Permits fell to 1.482M from 1.459M. Completions dropped to 1.549M from 1.582M.
Initial Jobless Claims fell 9k to 215k in the week ended 12-Apr, below expectations of 226k, versus 224k in the previous week. Continuing claims rose to 1,885k in the 5-Apr week from 1,844k in the previous week.
Philly Fed Index plunged 38.9 points to a one-year low of -26.4 in April, below expectations of 5.0, versus 12.5 in March. "The survey’s indicators for general activity, new orders, and shipments all fell and turned negative. The employment index registered a near-zero reading, suggesting steady employment conditions. Both price indexes continue to suggest overall price increases," according to the report.
GOLD
OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$14.43 (-0.43%)
5-Day Change: +$152.43 (+4.80%)
YTD Range: $2,607.16 - $3,354.76
52-Week Range: $2,281.97 - $3,354.76
Weighted Alpha: +46.73
Gold set another new record high at $3,354.76 in Asian trading before profit-taking ahead of the long holiday weekend surfaced. Most markets are closed tomorrow for Good Friday. Eurozone, UK, Swiss, and Scandinavian markets are also closed on Easter Monday.

Despite the intraday setback, the yellow metal is poised for a second straight higher weekly close. Gold has notched higher weekly closes in 14 out of the last 16 weeks. Ten of those weeks saw record highs. Gold hasn't seen consecutive lower weekly closes since December.
Broad global uncertainty stemming from U.S trade policies, which has resulted in a trade war with at least China, continues to stoke safe haven demand for gold. A weak dollar is providing additional support.
This week's push above $3,290.11/$3,300.00 shifted focus to the next Fibonacci objective at $3,493.00, which corresponds closely with the $3,500 longer-term target that the market has been talking about since early in the year. It looks like we may reach $3,500 before many were expecting.
The $3,400 level offers an intervening psychological barrier. Further out, $4,000 is looking increasingly appealing amid robust official sector demand and mounting investment demand.
ANZ Bank raised its year-end gold forecast to $3,600 from $3,200. "Increasing risks of a deeper recession, another turn in the geopolitical landscape, disruptions in global supply chains, fears of rising inflation along with a changing rate outlook suggest that gold will remain on strong footing in the foreseeable future," ANZ noted.
Goldman Sachs and UBS upped their expectations for the yellow metal to $3,700 and $3,500, respectively. With the breach of his $3,300 target, Ole Hansen of Saxo Bank now likes $3,500 as well.
It would likely take a major breakthrough on the trade front (perhaps specifically with China) to diminish haven interest in any meaningful way. While that could result in a significant setback, I would still view any retreat as corrective within the dominant uptrend.
Even if trade deals get sorted out, U.S. trading partners have been sufficiently rattled to perpetuate the de-dollarization trend. Similarly, investors have been unsettled by recent stock market volatility to the point that gold will continue to be viewed as an attractive portfolio addition.
Despite today's probe below $3,300, look for last week's high and close at $3,243.16/$3,238.14 to remain protected. More substantial support is marked by Wednesday's low at $3,229.84.
SILVER
OVERNIGHT CHANGE THROUGH 6:00 AM CST: -$0.438 (-1.34%)
5-Day Change: +$1.270 (+4.07%)
YTD Range: $28.565 - $34.543
52-Week Range: $26.049 - $34.853
Weighted Alpha: +12.81
Silver has retreated to the 20- and 50-day moving averages as traders paired bullish bets ahead of the long weekend. While Wednesday's test above $33 could not be sustained, a close above $32.294 would confirm a second straight higher weekly close.

Today's setback is not surprising in light of silver's recent volatility. Who wants to be long over a holiday weekend two weeks removed from a 13% plunge?
That being said, the magnitude of the rebound since the seven-month low was hit last week at $28.565 has been impressive. More than 61.8% of the plunge from the March high has been retraced, and key moving averages have been regained.
However, the rally speaks as much to silver's volatility as the plunge. Ongoing caution is warranted, but I maintain a bias toward the longer-term uptrend based on the realities of supply and demand.
The Silver Institute reports that industrial demand for silver rose 4% in 2024 to reach a record high of 680.5 Moz. It was the fourth year in a row for record-setting industrial demand.
While overall demand was down 3%, driven by "weakness in physical investment and slightly lower silverware and photographic demand," the market was in deficit for a fourth straight year.
The trade organization believes the market will remain in deficit in 2025, although the gap is expected to tighten to a four-year low of 117.6 Moz. Marginally weaker demand of 1.15 Boz and a forecasted 1.5% increase in supply will account for the narrower deficit.
The Silver Institute does anticipate "a modest recovery in coin and bar demand in some Western markets." That's some potential good news for our clients in the bar and coin space!
As for tariffs, the SI says, "The impact of US tariffs will be a key risk to silver demand this year. An extended period of elevated tariffs, or a further escalation of global trade wars, could lead to significant supply chain disruptions and sharply lower global GDP growth. These will weigh on industrial, jewelry, and silverware demand, though physical investment could benefit from rising safe-haven purchases."
Wednesday's high at $33.050 now provides intervening resistance ahead of the $33.264 Fibonacci level (78.6% retracement of the recent plunge). Penetration of the latter would bode well for tests back above $34, with potential to the 28-Mar high at $34.543, and the key 22-year high from October at $34.853.
On the downside, watch the 50- and 20-day MAs at $32.529/474 on a close basis. The low for the day at $32.134 bolsters Tuesday's low at $32.124. Below that, $32.000 and $31.833 would be in play.
Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com
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